As a company located in an island state that is home to 1,100 of our teammates, it is our responsibility to protect and care for our land and natural resources. We see the direct and societal benefits of having our own clean energy system and know how important it is to help our customers save on energy costs and reduce their impact on the environment.
In 2022, ASB originated more than 270 new Clean Energy Loans totaling $12 million. We also acquired a portfolio of residential clean energy loans from another lender, valued at $115 million as of December 31, 2022. These loans allowed homeowners to purchase and install their own photovoltaic systems, solar water heaters, solar air conditioning and battery backup and storage. We work closely with local contractors to make financing easy for consumers. We offer financing for green purposes, such as electric transport, solar energy, storage and largescale renewable energy systems.
We also financed over $65 million in commercial clean energy projects from 2010 to 2022, supporting a total of 21.30 MW in renewable energy capacity. From nonprofits to large commercial real estate and apartment buildings, we are equipped to help customers finance medium and large-scale clean energy improvements. The following are just a few examples:
By partnering with the Hawaii Green Energy Market Securitization Program, ASB is able to provide customized financing options for commercial clients interested in clean energy improvements. Our tailored loan structures allow customers the time and flexibility they need to repay their outstanding loan balance, which means more local businesses can take advantage of energy efficiency opportunities.
We work with apartment associations and owners of multi-family dwellings to help bring energy efficiencies to buildings across the islands. While most of our projects have centered around solar installations, we help condo associations finance other improvements, such as energy efficient lighting, HVAC, building envelope and water heating projects.
Recent commercial financing includes clean energy loans for non-profit customers, schools and both leased and owned commercial properties where our customers operate their businesses.
We also have opportunities to participate in tax credit programs, such as New Markets Tax Credits (NMTC), to help fund renewable energy and other projects in disadvantaged communities. Through a Hawaii-based community development entity formed in partnership with the Oahu Economic Development Board, we helped deploy over $100 million in NMTCs and plan to apply for future allocations. These allocations help bring new investments, services and job creation to some of the most underserved, low-income communities in our state and include direct investment in renewable energy projects in support of our state’s clean energy transition.
Operating on an island chain, we know that we must plan for extreme weather and sea level change and prudently mitigate related risks. One of the key potential risks from climate change is the potential for sea-level rise to affect properties that secure our loans.
We regularly monitor our credit risk exposure in areas at risk of future sea-level rise. All new residential and commercial real estate loans must undergo an environmental due diligence review as part of the underwriting process, which analyzes whether the property is located in a floodplain, sensitive ecological area or on contaminated land. Owners of commercial and residential properties located within the Special Flood Hazard Area, as designated by the Federal Emergency Management Agency, must obtain flood insurance through the National Flood Insurance Program as a condition of obtaining a property loan. We also require mortgagors to obtain hazard and hurricane insurance on their residential properties.
Our ASB Campus enabled us to bring more than 650 teammates who were once spread out across five different office locations across Oahu together under one roof. This consolidation enhances our operational efficiency and reduces emissions by significantly cutting down on the amount of time and energy commuting to meetings across town at other ASB locations for meetings.
In designing our Campus, we wanted a building that was reflective of our commitment to care for our customers, teammates and community. We saw the construction as an opportunity to rethink how we do business and what efforts we could implement to reduce our impact on the environment. Our Campus features some of the latest green technologies, including solar panels, electric vehicle charging stations, self-tinting windows, responsive LED lighting, water bottle filling stations and reclaimed wood furniture. We also used this opportunity to evaluate our work processes and committed to being as paperless as possible.
As we build or renovate our new locations, we are incorporating LED light fixtures and signage, self-tinting windows and low-flow water fixtures as part of our commitment to be more environmentally friendly. For our existing branches, we have rolled out green initiatives and are retrofitting the facilities with sustainable features. These include installing LED light fixtures and low-flow water fixtures and implementing recycling programs. In addition to having a positive impact on the environment, these features reduce our energy and water use and positively impact our bottom line.
The board recognizes that climate change, as well as other ESG-related risks, could have a significant impact on ASB’s long-term value. As a result, the board has determined that all physical and transition risks associated with climate change should be identified and formally integrated into our existing governance structures.
We are proud that five independent board members have direct experience in climate change and environmental management issues. Over the past few years, the board has also enlisted the assistance of third party experts in climate change risk. This in-house and external expertise has enabled the board to have informed discussions on how climate change may potentially affect ASB’s financial risks, including credit, market, and liquidity, as well as operational, strategic, and reputational risks.
The board holds a quarterly review of ESG-related strategic matters and manages an annual review of company strategy and enterprise risk at board strategy retreats. Topics of focus include:
Analysis of cross-sector decarbonization pathways for Hawaii to achieve climate objectives.
Investments in decarbonization strategies, alignment with global climate ambitions, and development of utility’s climate targets and pathways to achieve net zero carbon emissions.
Update on the integration of material ESG elements, including climate change into risk management and strategic planning.
Deep dive on climate change risk and sea level rise, which included presentations by a leading climate risk analytics firm and discussion about climate-related risks and mitigation plans.
Members of our ASB Management Committee team, including our EVP of Enterprise Risk & Regulatory Relations, EVP & Chief Credit Officer and EVP & Chief Financial Officer, EVP & Chief Marketing and Product Officer, and EVP & Chief Administrative Officer, play a critical role in identifying, mitigating, managing and reporting climate-related risks. They report important insights to the board during quarterly board meetings and on an as-needed basis.
The board oversees climate-related and other risks through comprehensive and integrated Enterprise Risk Management (ERM) program. The board also reviews and provides feedback on the company’s ERM program for identifying, mitigating, managing and reporting climaterelated risks to ensure these processes are effective. Topics discussed by the board include business continuity, technology innovation and integration and potential implications for physical assets and financial assets such as the bank’s loan portfolio.
Climate change is expected to increase the severity and frequency of hurricanes, flooding and droughts in Hawaii while leading to rising temperatures and sea level across our state. If not appropriately planned for and addressed, these physical climate change impacts could cause damage to (i) ASB’s facilities and equipment, which could impact operations and reliability, (ii) the properties that secure our residential and commercial loans, which could impact the value of that collateral and (iii) the state economy, which could affect the financial health of our customer base.
We’re focused on managing and mitigating physical risks to our operations from climate change and we are leaders in community planning initiatives to promote physical and economic resilience in our state.
In addition to physical risks, we must also be prepared for risks associated with transitioning to a low-carbon economy, including increased climate-related government regulations and enforcement actions, the cost of converting to low-carbon technologies, uncertainty in the market due to shifts in consumer preferences, and reputational impacts resulting from our response to climate change risks.
As with any challenge or issue, the threat of climate change presents an opportunity to innovate to better serve our customers, teammates and community, make our business more efficient and become better stewards of our environment and natural resources. For example, we:
For more information about the risk and opportunity horizon over the short, medium and long-term, and an analysis of ASB’s strategy in different climate-related scenarios, please visit HEI’s 2022 ESG Report.
Given how central climate impact is to our state and our strategies, we understand the importance of measuring and reporting on our GHG emissions. We completed our first detailed emissions inventory in 2022 and continue working with experienced advisors to calculate and disclose our emissions in line with global and industry standards. This year, we’ve built upon our initial inventory by expanding coverage of Scope 3 categories.
The GHG emissions inventory captures the types of emissions listed in the table below over the last three years (relative to a 2015 baseline, the earliest year for which we have a complete enterprise-wide inventory). Net GHG emissions in measured categories decreased 19.2% from 2015 to 2022, driven largely by our consolidation of office spaces and branches.
SCOPE 1
Direct emissions, including:
SCOPE 2
Indirect emissions, primarily:
SCOPE 3
Value chain emissions, including:
As of December 31, 2022
As of December 31, 2022
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As of December 31, 2022
As of December 31, 2022
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As of December 31, 2022
As of December 31, 2022
As of December 31, 2022